Despite what you may have heard from overheated pundits, the PC and Microsoft are not dead nor are they dying. Debra Littlejohn Shinder explains why.
Everybody's talking about the "post-PC era." According to numerous pundits, we've either already entered or are about to enter a time when nobody needs a clunky laptop anymore, much less a big, ugly desktop computer. Instead, we'll do our computing on tablets and smartphones that we can carry with us everywhere. Depending on which camp you're in, these devices will all be running either iOS or Android. There's no place for the likes of Microsoft and its hardware vendor partners in this scenario.
That viewpoint seemed to get a big boost in credibility last week, when the top U.S. PC vendor, Hewlett-Packard, made the surprising announcement that they are getting out of the PC business. Headlines such as "HP Surrenders as Post-PC Era Beckons" were inevitable.
Of course, if you dig a little deeper, you find language that's a lot less provocative; the company is actually "evaluating strategic alternatives." That sounds a little less dire, but it still signals a very big change in the company's business model. Does it also portend big changes ahead in the industry itself? And, as with last week's Google/Motorola deal and every other big thing that happens in the industry, we have to wonder what effects it will have on Microsoft.
Microsoft responds: Plus, not post
Not surprisingly, Microsoft disagrees with the doomsayers and believes the rumors of the PC's death have been greatly exaggerated. Corporate Vice President Frank Shaw wrote in a TechNet blog that there are things a PC does uniquely well and thus it won't be going away anytime soon. He posits that tablets, smartphones, ebook readers, and so forth are specialized, supplemental devices that people will want to own in addition to their PCs. His take: We're not entering a post-PC era; we're entering the "PC Plus" era.
Good news or bad news?
At first glance, this might look like bad news for Microsoft. In 2010, HP shipped 62.7 million PCs, most of them running Windows. Does HP's expected departure from the PC business mean millions fewer OEM copies of Windows sold? Probably not.
After all, it's not as if HP is planning to just set fire to its PC manufacturing division. As the article referenced above notes, the idea is to sell or spin off the PC business into a separate company. Who knows? Maybe the new company will make and ship more PCs than ever.
But even if the numbers aren't as high, they will still be making PCs. And they'll need an operating system to run on them. And it's highly likely that the OS will be Windows. On the other hand, if HP's Touchpad hadn't flopped (which seems to be the primary factor that triggered this decision), it was well known that they had plans to expand their webOS operating system to run on desktop systems, as well.
Had that happened, they would have been in a position to push the PCs running their own OS instead of Windows, especially if they could offer the machines at a significantly lower price. Some called those plans a "bombshell" for Microsoft. Given the possible effect on Windows if webOS became a successful laptop and desktop alternative, Microsoft folks might well be breathing a sigh of relief at HP's latest announcement.
We should note that despite all the many obituaries for it that have appeared in the tech press the last few days (e.g., "HP Kills webOS"), HP insists that it's not dead. Ina Fried in the Wall Street Journal's All Things D reported this week that webOS is still coming to PCs and printers. This comes from an interview with Stephen DeWitt (who is in charge of webOS), in which he said that the company will continue working on webOS-on-Windows. Well, as long as it needs Windows to run on top of, that should pose no threat to Microsoft, right?
Bye, bye or buy, buy?
As Paul Thurrott noted in the August 19 edition of his WinInfo Short Takes, some have suggested that Microsoft should buy HP themselves and get into the hardware business. Making both the hardware and software has been a successful strategy for Apple, and now Google has headed down that path with its purchase of Motorola Mobility. That would certainly shake things up, but Microsoft has traditionally held fast to its identity as a software company.
That has been slowly changing, though. After all, Microsoft is already in the hardware business — the Xbox 360 is one of its currently most successful products. And it's clear that Microsoft has bigger plans for the Xbox brand in the future. No longer just a gaming console, it's destined in Microsoft's vision to become the entertainment hub in consumers' living rooms, combining gaming, social networking, music/video, and IPTV.
Does it make sense, then, for Microsoft to buy HP's PC division and replay the same type of integrated hardware/software strategy by also building its own Windows 8 computers (which would also integrate tightly with the Xbox)? Or will the Xbox itself — rather than the tablet — eventually emerge as the real replacement for the PC in a post-PC world?
Swing your partner
Assuming Microsoft doesn't buy HP, does HP's departure from the PC business mean a "divorce" for HP and Microsoft? The two companies have enjoyed the mutual benefits of a strategic partnership for a long time. Several times, HP has been named Microsoft Partner of the Year. Both companies' websites boast of their alliance.
However, a closer look at those web pages reveals that their focus is on SMB and enterprise solutions — not the consumer market. And HP's press releases have made it clear that they have no intention of abandoning that market and will in fact be focusing on the business segments now.
According to reports I've read, HP still plans to make and sell servers and "other business devices." And I'm pretty sure that, even if webOS does survive, there's not going to be a server edition of it. More likely, those servers will be running Windows Server. HP has also partnered closely with Microsoft on solutions involving SQL Server, Unified Communications and Collaboration (SharePoint, Exchange, Lync), and virtualization. It seems a new focus by HP on the business segment would only further solidify those partnerships.
Those who are claiming that HP's recent announcements signal the final nail in the coffin of PCs and that this in turn means the slow death of Microsoft aren't looking at the whole picture. Michael Dell still believes in the PC, and so do millions of us out here who depend on them to get our work done and have found tablets to be best utilized as supplementary consumption devices, not as PC replacements.
That's not to say that the form factor of the PC won't change over time. Just as it morphed from the flat desktop or "pizza box" that sat underneath the monitor to the tower to the mini-tower to the laptop to the netbook, I have no doubt that someday we'll have full-powered computers the size of tablets or phones, with ports to connect large monitors and keyboards.
The Motorola Atrix and the ASUS Transformer have already given us a taste of the idea, but neither has really sold like hotcakes. When I ask people who have tried them why they didn't buy one, the most common answer I got was that it didn't do everything they wanted a laptop to do or that it wouldn't run the applications they needed a laptop to run. Whether they know it (or would admit it) or not, what they're saying is, "it doesn't run Windows."
Microsoft has big plans for Windows 8. If they can pull it off, make it run well on a light, thin tablet that gets great battery life, and has all those connection ports and expansion slots that the iPad and Android tablets are missing, it will be the ultimate PC. And I believe there's a substantial market for that.
Buying HP (or another hardware vendor) and making it themselves would solve some problems but create others. I think it makes more sense to partner closely with established hardware vendors, including not just Dell but also current tablet/phone makers such as Samsung, HTC, and LG that may be feeling less enthusiastic about Android in the wake of Google's purchase of Motorola. They can exert control over the device specs as they're doing now with Windows Phone to ensure a more uniform experience.
Bottom line: Microsoft doesn't need HP to survive in the PC business, and HP's departure might even have a positive impact on the success of future Microsoft PC operating systems.